Melani also urged the legislators to speed regulatory review of Highmark’s acquisition of the ailing West Penn Allegheny Health System, which reported an operating loss of $27.1 million for the first fiscal quarter of 2012, double the loss of a year ago for the same period. Any delay would jeopardize the viability of the system, he said.

Sen. Jim Ferlo, a Democrat from Highland Park, questioned whether Highmark’s financial commitment to WPAHS would be enough to keep the system’s doors open. Ferlo said he didn’t expect Insurance Department public hearings on the issue until February or March.

“If it takes that long, we will not have a second (health care) system” in Pittsburgh, Melani answered.

“Short of divine intervention, I’m skeptical,” Ferlo said.

Highmark has agreed to loan WPAHS $200 million and extend grants totaling an additional $200 million plus $75 million for scholarships for a new medical school. But UPMC President and CEO Jeffrey Romoff said that wasn’t enough to keep WPAHS afloat because of its $200 million unfunded employee pension plan and other liabilities.

“I don’t believe the Highmark plan can save WPAHS,” he told the committee. “I believe that’s a fiction. This is a non-starter, period.”

WPAHS has been losing $200 million a year and the system is on track to lose $120 million this year, Romoff said, even with Highmark’s money.

Implicit in the Highmark-UPMC provider contract signed nearly 10 years ago is the provision of doctors’ services for Highmark members through June 2013, which is when the run-out period for the hospital services agreement expires, Melani said. UPMC has insisted the doctors’ contracts expire in June 2012, a dispute that’s being litigated in federal court as part of a false advertising claim Highmark filed against UPMC.

Related links:

Industries:

Comments

If you are commenting using a Facebook account, your profile information may be displayed with your comment depending on your privacy settings. By leaving the 'Post to Facebook' box selected, your comment will be published to your Facebook profile in addition to the space below.